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Diagonal mergers and foreclosure in the internet

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  • Emanuele Giovanetti

Abstract

We study the incentives for a ''diagonal'' merger between two Internet Service Providers, one a wireless retail only ISP in two origination markets, and the second a vertically integrated wired retailer in one market and an upstream provider in the other. The merger’s effects depend on differentiation in access modalities; only with high differentiation does the merger have positive welfare effects. We focus on post-merger foreclosure, which, when it happens, only takes place in the market where the merger is horizontal and not where the merger is vertical. The Network architecture used is meant to capture Internet routing.

Suggested Citation

  • Emanuele Giovanetti, 2005. "Diagonal mergers and foreclosure in the internet," Working Papers in Public Economics 80, Department of Economics and Law, Sapienza University of Roma.
    • Handle: RePEc:sap:wpaper:wp80
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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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